Take Two Interactive Software (TTWO) Stock Could Be 13.6% Undervalued After GTA VI Preorder Date

Take-Two Interactive Software (TTWO) is back in the spotlight after Rockstar confirmed that Grand Theft Auto VI preorders will open on June 25, a milestone that helped lift the stock by about 5%.

See our latest analysis for Take-Two Interactive Software.

The preorder news comes after a strong recent run, with Take-Two Interactive Software’s share price showing a 13.0% 7 day return and a 19.26% 90 day return. This is despite the year to date share price return being down 4.90% and the 1 year total shareholder return being roughly flat at 0.38%, which suggests momentum has picked up recently even though the longer term picture is softer.

If GTA VI has you thinking about where else growth stories might emerge in gaming and beyond, this is a good moment to scan 33 AI small caps.

With Take-Two Interactive Software up strongly in recent months and Grand Theft Auto VI now on the calendar, the key question is whether today’s price still leaves upside on the table or if the market is already paying up for tomorrow’s growth.

Most Popular Narrative: 13.6% Undervalued

The most followed valuation narrative pegs Take-Two Interactive Software’s fair value at $276.97, compared with the last close of $239.28. This frames the recent rally in a different light.

GTA V’s online ecosystem, which is now 13 years old, generated revenue for over a decade and continues to do so. If GTA VI online follows a similar trajectory, the long tail value of this single title is almost incalculable on a conventional near-term model.

Read the complete narrative.

Want to see what is baked into that GTA VI long tail assumption? The narrative leans heavily on projected bookings, margins and a reset in earnings power. The full story connects those levers to that $276.97 fair value.

Result: Fair Value of $276.97 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, the Take-Two Interactive Software story still hinges heavily on the execution of GTA VI and on the company turning recent net income losses around.

Find out about the key risks to this Take-Two Interactive Software narrative.

Another View: What Multiples Say About Take-Two Interactive Software

While the most popular Take-Two Interactive Software narrative talks about a 13.6% discount to fair value, the market’s own pricing tells a tougher story. At a P/S ratio of 6.7x, TTWO trades far above the US Entertainment industry average of 1.2x and above peers at 3.9x. It also sits ahead of its fair ratio of 3.5x, which is the level our models suggest the multiple could drift toward over time, raising the risk that sentiment may already be generous.

That leaves investors with a clear tension: are you more persuaded by the optimistic narrative around GTA VI, or by a valuation multiple that already prices Take-Two Interactive Software well above its sector and fair ratio benchmarks?

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Given the mix of excitement around GTA VI and concern about execution and valuation, it makes sense to look at the underlying data yourself and decide quickly how compelling the story really is, starting with the 1 key reward and 1 important warning sign.

Looking for more investment ideas beyond Take-Two Interactive Software?

If GTA VI has sharpened your focus on where capital could work hardest next, do not stop at Take-Two Interactive Software. Broaden your watchlist before the next wave of opportunities moves without you.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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